Cuts RIte Care, welfare, state payroll to close nearly $300M budget gap
Gov. Donald L. Carcieri’s budget for fiscal 2007 makes its boldest proposals in areas not directly affecting business – state personnel reforms and welfare limits – but Medicaid cuts and targeted investments included in the plan could make an impact on some sectors.
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The latest projections show a $222.4 million deficit in the 2007 budget if no cuts were made. Carcieri last week also submitted a revised 2006 budget that shows a $77 million shortfall.
To close this nearly $300 million combined gap without raising taxes, Carcieri focused on ways to cut spending. At the same time, to promote the state’s “economic future,” he proposed investments in math and science instruction and in a pilot program that aims to make Rhode Island the first state with border-to-border Wi-Fi access.
Carcieri also called for the continued reduction of the car tax and an increase in aid to local education. And he proposed a $20 million bond to develop a statewide health information network and the creation of a $100 million “trust fund” from securitized tobacco settlement money to help subsidize health premiums for some small businesses.
In health care circles, however, any rejoicing about the latter investments was tempered by Carcieri’s proposal to cut RIte Care, the state’s managed care Medicaid program for welfare recipients, and low-income children and parents.
RIte Care now covers children in households with incomes up to 250 percent of the federal poverty line, and parents in households up to 185 percent of poverty. Carcieri wants to cover only parents with incomes up to 133 percent of poverty, and he wants to make undocumented immigrant children ineligible for the program.
The estimated savings from those changes would be $13 million.
But Edward J. Quinlan, president of the Hospital Association of Rhode Island, said driving those people out of the RIte Care program wouldn’t stop them from seeking care when they need it – it would just place a greater financial burden on hospitals.
Hospitals are required by charters and by laws to serve patients regardless of their ability to pay and already lose $100 million annually in Rhode Island because of the practice, Quinlan said. Having more uninsured people would increase their losses, he said.
“You’re talking about a cost shift from the public sector to the private sector,” Quinlan said. “Hospitals do not have funds set aside to meet those needs.”
At a news conference last week, Carcieri was asked whether he was balancing the budget by cutting off services for needy people. He replied: “I don’t think it’s our job to, if you will, provide for people that are here in an undocumented fashion…. I want to take care of Rhode Islanders. We can’t take care of the rest of the world’s problems in terms of health care.”
The governor’s budget also includes changes to the state’s welfare program by, among other things, reducing the time that families are allowed to be on it from 60 months to 30 months. But Carcieri noted that despite the proposed reductions, the Department of Human Services’ budget actually increased under his plan.
Carcieri’s budget is even tougher on state workers. His plan would eliminate 420 full-time positions to save $32.2 million. And with nearly 27 percent of the state’s work force nearing retirement age, it includes incentives to retire by July 1. The governor’s proposal looks at eliminating the payout of unused sick pay after July 1. Employees are currently entitled to as much as eight weeks’ pay for accrued sick time.
The governor is not proposing to raise sales or income taxes this year. However, his budget calls for the implementation of rules that would make it easier for sellers to collect sales taxes for items sold online.
The budget proposals quickly met with criticism.
Lt. Gov. Charles Fogarty, a Democrat who is running against Carcieri in the upcoming election, said the RIte Care and welfare cuts “will have devastating impacts on thousands of struggling Rhode Island families.”
“It is ironic the governor proposed a new health care initiative one day and then followed it the next day with callous cuts that would eliminate coverage for children and low-income families,” he added in an e-mail to PBN.
Carcieri spokesman Jeff Neal responded by saying Fogarty had opted to “criticize from the sidelines,” while Carcieri “has demonstrated that leadership by making the difficult choices necessary to reduce the rate of growth in state spending, so we can balance the budget and begin to lower our state’s high tax burden.”
House Finance Committee Chairman Steven M. Costantino, a Providence Democrat, conceded that the 2007 budget would be difficult to craft. The goal, he said, would be ideally to share the burden of the deficit across all areas of state government.
“Some of the governor’s proposals may be items that the House Finance Committee will have to concur with, but there may be other ones that are unrealistic in terms of savings and may actually cause us long-term harm,” Costantino said.
Gary Sasse, the executive director of the Rhode Island Public Expenditure Council, said Carcieri’s budget was “taxpayer-friendly” and “right on track” in its effort to curb spending – though he noted that he still had to look at the details.
“The problem we have in this state – it’s really a sustainability and an affordability question,” Sasse said. “None of these decisions are easy, and no one relishes saying no, but at the same time, people – whether they’re individuals, families or the state – we have to live within our means. And I think that’s what the governor is trying [to do].”
