There has been so much activity during the past week, the timelines all blur together. With just three days left to the end of the legislative session, Governor Pawlenty and lawmakers still are working to come up with a way to erase a nearly $3 billion budget deficit. We have heard that the key sticking points that remain from leadership discussions with the Governor are: ratifying Pawlenty's unallotment, the K-12 shift, and the early expansion of Medicaid. Let’s start with the most recent action—the Governor’s vetoes and related budget issues—then go back to some of the health and human services issues.

On May 13, Governor Pawlenty vetoed H.F. 2614, the omnibus health and human services (HHS) bill. In his veto message he led with: “The bill was presented to me in the absence of a global budget agreement or even good faith negotiations with my Administration.” An indicator of what is being discussed right now behind closed doors (additional cuts) is also included in the veto message: “Moreover, the minimal deficit reduction targets found in this bill may not be sufficient to help address the FY 2010-11 deficit or make any meaningful progress on the FY 2012-13 shortfall.”

Several days before, the Governor vetoed H.F. 2037, which was the DFL proposal on how to balance the budget deficit with a “combo platter” of cuts, shifts and increases in revenue from a change to the income tax percentage. In THIS veto message, the Governor stated: “…It is nonsensical to increase taxes on job providers merely weeks after I signed a bill to provide tax incentives for Minnesota businesses to grow jobs. This behavior sends a confusing and mixed message to companies looking to produce jobs in Minnesota. The bill also does very little to address the budget deficit in the next biennium, leaving a nearly $5 billion deficit for the next Legislature and Governor to address…”

Other issues that have certainly weighed in on both the numbers, as well as the negotiations, are the state Supreme Court decision on May 5 that essentially negated the $2.7 billion in unallotments and shifts made by the Governor in 2009; and the reaction from Congress to the extension of the enhanced federal medical assistance percentage (FMAP). Currently, the HHS “targets” and the Governor’s proposed budget in February incorporate an estimated $408 million in federal funding. Originally, state officials had expected that federal commitment much earlier in the session. But, the money isn’t here. The money is tangled up in a monster-sized federal jobs bill whose own passage is uncertain. While Democrats in Congress have vowed to pass the bill soon, they have yet to reach a deal on how to pay for the $140 billion package of unemployment benefits, health care subsidies and tax breaks. Minnesota is just one of 24 states relying on Medicaid provisions in the jobs bill to balance their budget.

Instead of “booking” the federal funds now as revenue to reach a budget target, state lawmakers are looking at booking the money as a "contingency plan," but are worried that booking the funds in any way could affect the State's bond rating. So, the much hoped-for $408 million in extra federal funding that legislators had been assured could be used to help close the gap now appears to be limbo.

So, here we are, without a balanced budget, with no HHS bill, and with a clock loudly ticking.

About that vetoed HHS bill...the Governor stated at his press event yesterday that the veto is necessary to start the next stages of getting a global deal together. It doesn’t mean that the 5% in cuts to elder waiver services are gone, however. It likely means that cuts to programs that were NOT cut (i.e. nursing facilities) in the first HHS bill will now be considered as their budget cut target is likely expanding. Unfortunately, we are not invited into these final back room negotiations. We have provided the Governor, legislative leaders, and legislators a last minute flurry of pleas for them to minimize any cuts to older adult services. We have re-introduced the phase out of rate equalization in our contacts. Our lobbyists have met with many legislators to reinforce our messages (and in the course of those meetings have been chastised for not appearing grateful enough that nursing facilities were spared cuts in the first round HHS bill). We have traveled the state meeting with editorial boards to share facts/figures/messages about the current “state” of older adult services. Members have stepped up to the plate in dramatic fashion to contact their legislators and their local media.

And all we can do right now is wait.