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Utah's budget debate: transportation and Medicaid

Published December 20, 2011 9:33 am

State spending • Advocates for the poor say earmarks rather than aid hurt flexibility.
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Unveiling his budget for next year, Utah Gov. Gary Herbert last week bemoaned the growing share flowing to Medicaid.

The health insurance program for low-income people consumes 17.6 percent of Utah's budget, hurting the state's ability to fund other priorities such as public schools, said Herbert, sounding a theme popular among conservatives.

But advocates for the poor say the national strategy of pitting Medicaid against public schools doesn't reflect reality in Utah. They point to another familiar budget boogeyman: transportation.



More specifically, earmarks flowing to roads and other infrastructure projects, which have grown 700 percent since 2005.

"Medicaid is growing and it is costing the state, but not at the magnitude that the governor and legislators profess," argues Lincoln Nehring, senior health policy analyst at Voices for Utah Children.

Looking at only state revenue, Medicaid's share of the budget is about 8 percent.

Herbert's calculation of 17.6 percent included federal funds, over which Utah has little discretion.

The federal government picks up about 75 percent of Utah's Medicaid tab — money that states can't divert to other hot spots.

Herbert wants to turn Medicaid into a block grant, giving states more power to spend the money as they see fit.

"You can make numbers say what you want them to say," said the governor's budget and planning director, Ron Bigelow. "Either case, Medicaid is growing."

The General Fund is fueled by sales taxes, and Medicaid now consumes 21.5 percent of those dollars, up from 11.5 percent in 2003, Bigelow said.

The School Fund, which is fed by income taxes, cannot be tapped for Medicaid costs.

But Nehring said in actual dollars, Utah is spending less on Medicaid than it did in 2006. That's largely thanks to a one-time injection of federal stimulus money, and that trend is expected to change soon, with a 3 percent increase budgeted for 2012.

And Medicaid looks like a bigger drain on the General Fund than it actually is, because the fund itself has shrunk, Nehring said.

First, the recession took its toll on tax collections as consumers reined in spending.

Then, just as rising unemployment caused more Utahns to turn to public aid, lawmakers siphoned money through earmarks. More than 90 percent were for transportation projects.

In 2010, 17 percent of sales taxes and user fees were spent on earmarks, up from 2.5 percent in 2005, according to an analysis by Voices for Utah Children.

That percentage will continue to grow through 2013 due to legislation channeling 33 percent of all new sales tax revenue to transportation. That's in addition to a base budget of $443 million and increased borrowing.

And lawmakers are looking to divert more on projects such as the Lake Powell Pipeline.

These projects aren't subject to the same scrutiny and weighed against other needs — and they're the true source of limited flexibility, said Nehring. "Given that tax increases are a nonstarter here, we aren't left with many options."

And that's the rub — the thing that most irks state leaders about Medicaid.

Transportation and Medicaid have both squeezed public schools and colleges, said Utah higher education commissioner William Sederburg.

But he predicts that transportation spending will soon run its course as the state approaches its debt limit.

The Medicaid problem is a trickier one, reflecting a broken health care system that will need to be fixed at the national level, he said.

Meanwhile, colleges will continue to pass costs on to students in the form of tuition hikes and local governments may step up with tuition-free solutions such as K-14 school districts, Sederburg said.

And an improving economy may, at least temporarily, lower the stakes.

kstewart@sltrib.com

Twitter: @kirstendstewart

 

 

 

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