Budget impasse imperils Medicaid relief solution

Agreement on the details of the state's takeover of the county Medicaid share hit a disappointing stumbling block this week as the House and Senate worked toward finalizing the state budget. For the last several weeks, a special team of House and Senate negotiators, along with the active participation of Gov. Easley and his staff, has been meeting daily to discuss ways to relieve counties of their Medicaid burden. This team spent countless hours crafting a reasonable solution to this complex problem. In short, their Medicaid relief plan realizes all three priority goals of counties in one fell swoop – county Medicaid relief, additional dollars for infrastructure, and additional revenue authority. They are to be commended for their efforts thus far to bring forward a fair and equitable solution.

This county-friendly plan would have the state assume all county Medicaid costs over three years and allow counties additional revenue authority to meet county infrastructure needs. Counties would give up only a half-cent sales tax, a revenue stream less than the county share of Medicaid. What's more, these local revenues would be phased out only as the state phases in Medicaid relief. For the few counties whose Medicaid relief is less than their countywide half-cent sales tax revenue, the state would hold them harmless. Cities likewise would be held harmless and would receive their anticipated sales tax growth as a part of the hold harmless arrangement.

Additional local-option revenue authority would help counties meet their increasing infrastructure demands. Counties could choose to enact – by a vote of the people – either an additional quarter-cent sales tax or a local 0.4 percent land transfer tax, to help meet capital infrastructure needs.

All members of the House and Senate need to be reminded, today and certainly before Monday, that permanent Medicaid relief is critical for the fiscal health of all counties, and additional revenue authority must be granted to handle the 515 new people moving into North Carolina each day! Collectively counties face nearly $10 billion in school capital and $7 billion in water and sewer needs over the next five years. Many communities are under development moratoria due to inadequate water and sewer capacity.

We understand that a few legislators are balking at the land transfer tax option, given the extensive and moneyed campaign the North Carolina Association of Realtors has been mounting against General Assembly members. It is discouraging that they are targeting individual legislators who are attempting to address the infrastructure needs of their communities in a responsible and equitable manner. Clearly, it is short-sighted to limit infrastructure investment needed to manage the daily influx of new residents.

The continuing resolution approved by the House and Senate this week will keep the 2006-07 budget in place through July 31, giving House and Senate budget negotiators another month to work out the final state budget. It is believed at this point that the final Medicaid solution may be included in the state budget, if legislators are able to reconcile how community infrastructure investments are to be supported.

Call your legislators today! We are too close to a permanent Medicaid relief solution to let anything derail us now!