Senate budget proposal doesn’t include Medicaid relief

By Todd McGee
Director of Communications

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The budget passed by the Senate in early May was not kind to counties, failing to provide any Medicaid relief and diverting $50 million from the public school capital (ADM) fund – through which each county receives a portion of the corporate income tax for new school construction based on its public school system’s Average Daily Membership – for state school operating expenses.

More on Medicaid relief

The lack of Medicaid relief in the Senate budget was a disappointment but not a surprise, said NCACC Executive Director C. Ronald Aycock, who added that several Medicaid relief bills in the House have widespread, bipartisan support.

“We will continue to work with our champions and the County Coalition in the House to make sure that our concerns are heard,” Aycock said. “There is still a long way to go in the budget process. The Senate budget is a starting point for negotiations with the House, and we will continue to fight for counties on all of these critical issues.”

Medicaid relief has long been the No. 1 legislative goal for North Carolina counties. North Carolina is the only state that requires counties to pay a fixed percentage of the state’s Medicaid burden. New York recently took steps to phase down their county share by capping its counties’ contributions.

“It’s unfortunate that the Senate would not include some Medicaid relief for counties, particularly for the distressed counties, given the information that we have provided them over the past six months,” said Bertie County Manager Zee Lamb. “The divide between the rich counties and poor counties in North Carolina will continue to grow as long as the General Assembly punishes the poorest counties for being poor by requiring counties to pay a mandated share of Medicaid.

“Because Bertie County is paying more than $2 million a year for Medicaid, or 15 percent of our total budget, we are not able to invest more in our schools or provide adequate law enforcement, recreation or other services that the more affluent counties in areas of the state are able to provide their citizens.”

In recent years, counties around the state have been forced to either raise local property taxes or cut local services to pay the county share of Medicaid, a federal program that is administered by each state. The county share is expected to be $450 million for the 2004-05 fiscal year, an increase of 67 percent in just the last five years.

The Senate budget also eliminates after 2006-07 the ADM Fund. The Senate proposes creating a new fund, the County Assistance Fund (CAF), beginning in 2007-08, and directing $150 million annually into the CAF from proceeds from a state lottery.

The Senate proposal replaces the $50 million taken from the ADM Fund in 2005-06 by designating $70 million of lottery proceeds to the current ADM Fund for 2005-06. In 2006-07, the state will contribute $150 million of lottery proceeds to the ADM Fund.

The CAF allocates monies to counties differently than the current ADM Fund and limits their use to construction only. The NCACC opposes these changes in how the funds can be used.

“Taking $50 million from the ADM Fund this year and replacing it with the proceeds from a non-existent lottery is a gamble that our state leaders should not take,” Aycock said. “Counties are in the midst of creating their annual budgets for 2005-06, and any uncertainty over the ADM Fund could cause many counties to raise taxes or cut services unnecessarily and could jeopardize the high bond ratings that our counties have worked so diligently to earn.

“Counties are mandated to build and maintain our public school facilities. In recent years, the General Assembly has mandated smaller class sizes in the lower grades, and this is at a time when our state is one of the fastest-growing in the nation. These two factors are requiring counties across the state to provide additional classroom space.”