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Krusin' the Capitol

By Nebraska State Senator Lowen Kruse

2003
Week 1
January 11, 2003

Yo!

We have returned to the floor. Hopefully bright-eyed. But certainly less bushy-tailed.

We are required to close a $673 million budget gap for the next two years. We do not know the real figure yet. It will be less, but still formidable -- about 11% of total budget.

Elections of chairs this week gave us good leadership. Very close. We vote for the persons, not the party, but the 7 new senators do not know the persons so it gets close.

I do not say it often, so will now. We have a good group of legislators. A lot of variety, which represents all kinds of folks, hard working and fair. Most are able to listen and dialog. The serious loss in the elections was Senator Suttle. The one who defeated her is a very good man, who will bring his own gifts. Suttle was one of the few who understood health care delivery, what we must spend, what we do not have to, what is not efficient, what savings will cost us more money. Her absence will cost Nebraska $$$, without doubt.

That is not to praise her. She was just doing her job. But it is a way to be specific about how holes in our data bank cost us money. When term limits kick in, watch out. We will have lots of holes and it will cost us real money. It's called "institutional memory."

On the budget cuts, we will be looking at all agencies, after cutting them three times last year. Finding fat would be fun, but I do not expect to.

Time to sum up the realities of our budget.

I receive messages to get tough. "Cut 10% across the board." That would be tough, but also quite stupid. Half of those cuts would simply transfer expenses to property taxes. That is not cutting. Reality.

So we are left with half the budget. Cut it across the board by 20%. That would create chaos, and not allow some agencies to fulfill requirements. The treasurer, for example, needs to count all the money, not some of it. The auditor shortage is already hurting us. Adding one new inexperienced auditor will collect $200,000 from tax evasion. Don't hire her? Not smart. Reality.

One-fourth of the budget is a cost shift when cut. Goes somewhere else, but does not go away. More on that, but reality. Another reality is that prison costs cannot go down until prison census goes down. Same with State Patrol and courts. We are now down to 6% of the budget, which is the total to run all elected offices -- governor, att. gen., treas., legislature, 45 agencies, etc. -- plus all their staffs. Wipe them all out and we are only half way to the deficit. Reality.

The item of most concern to me in the above is cost shifts. I have been consulting with city and county managers as well as providers, to evaluate the 57 proposals Health and Human Services has passed on to the governor. DO UNDERSTAND, they do not recommend all these cuts and the governor has not said what he is choosing. We have asked every agency to come in with 90% budget and prioritize the cuts they made to get there. This is their cut list.

One of these would save the state $3.2 million. We lose 4.5 m in federal funds if we take the cut. The additional cost to Douglas County would be about 7 m. Not only a cost shift, but a cost add. [It would cut state budget.]

Another would shift the cost to hospitals, where room rates would go up and private hospital insurance rates would rise. The bills we pay, almost always at 40% of cost, would go to hospital emergency rooms, where the law is that no one can be turned away. And no 60% federal co-pay.

The law is that the county is "payer of last resort" for health care costs for low income persons. A hospital or physicians clinic can sue for unpaid bills. The county cannot collect the 60% deduction either.

We have squeezed the rates to mental health and nursing homes the last two years, to the point that some are closing. If we cut the rates for Medicaid residents in nursing homes, the private pay rate will have to go up. Another way of putting it is that we are ALL being subsidized by the bills paid to hospitals and nursing homes. Or more precisely, our property taxes are being subsidized, because nursing care for low income persons has been a county responsibility for decades. Why are taxes going up? One big reason is we are living longer. Over 3/4 of Medicaid is elderly billing.

We are asking state employees to contribute about $1,000 each (salary cut on average), for these two years. That is not fair and I do not like it. They are not overpaid and they will pay any addtional taxes like anyone else. However, the positive side is that every one of them will be looking for ways on their jobs to save state funds. We need their input and we need your input if we are not only to survive but to prosper as a state. I am optimistic in the long haul.

That's the bad news. Next week, the good news. We are on the prowl for funding sources which can prevent tax shifts.

Hang in there!

Lowen

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