by Brenée Goforth
Communications Associate, John Locke Foundation
JLF Senior Fellow Joe Coletti recently put out a brief on the current budget impasse. Coletti emphasizes that, unlike past budget discrepancies, the budget impasse is not an immediate crisis. While it is important to pass a new budget, North Carolina is not going to be devastated if it does not come promptly. Coletti explains:
One reason for the difference is that there is no threat of a government shutdown. This is the first test of a 2016 amendment to the State Budget Act. Because there was no new budget in law at the start of the fiscal year on July 1st, last year’s budget continues without the one-time adjustments that were in effect.
Coletti writes that, while certain programs will go unfunded, “96.5 percent of what the conference bill would have been spent on state operations is available.” The current budget does not include funding for enrollment changes in public schools, community colleges, universities, or the Medicaid transition to managed care. According to Coletti:
Medicaid’s transition to managed care presents the biggest challenge. Senate leadership has considered delaying the rollout of the new system without new funding. Setting aside the $2 billion combined cost of Medicaid expansion Gov. Cooper still seeks, the budget rebase adjustment for higher enrollment and health care utilization adds $30 million in state appropriations. For comparison, the current Medicaid program costs state government $3.9 billion, so the increase is three-fourths of one percent (0.77 percent) of total state appropriations. This could also be handled through formal budget revisions or an accelerated allotment of funds for Medicaid until a budget is passed.
All of these things can be done once a budget passes. Until then, there is no crisis in covering the continuing costs of schools, community colleges, universities, or even Medicaid. In contrast, Gov. Cooper’s demands for billions of dollars in new federal borrowing to expand Medicaid and $3.5 billion in new state borrowing to expand other state programs make a future crisis more likely.