Water,
water everywhere, nor any drop to drink.
That
line from Samuel Taylor Coleridge’s “The Rime of the Ancient Mariner” has come
to mind repeatedly for me over the past several weeks as we face huge deficits
in our budgets despite having that $1.25 billion in federal COVID-19 bailout
money. We have received far more from the Coronavirus Relief Fund (CRF) per
person than most states, because the “small states” formula places a minimum
amount in fund distributions. But the money is tightly limited to use for
expenses caused by COVID-19 and to be fully expended by December 30.
It
very explicitly is not permitted to be used to make up for revenues we’ve lost,
or to pay for anything that was already in our usual state spending. Best
guesses at this point put our lost revenues for next year’s budget at $400
million. Making up for that could result in very severe cuts to state services
of all types.
There
is a hope that Congress might relent and allow some of the CRF money to go
directly to the bottom line for state budgets. For that reason, the legislative
leadership has made the decision to hold back on spending $400 million of our
CRF funds for several months, so that in September when we build the budget for
October-July, the cash will still be there if it turns out we can use it.
The
Governor is proposing getting all the relief funds out the door as soon as
possible, because both businesses and our health care system are in deep
financial trouble and need it to keep the doors open. That means the big chunks
of spending proposed by the Governor in contrast to what the legislature is
considering differ significantly, even though many priorities are similar.
Of
the $1.25 billion, $275 million has been spent or committed already for urgent
needs. The administration has proposed relief packages of $400 million for
economic stabilization to help small businesses get back on their feet and
restore jobs. The governor’s second major package was proposed this week: about
$330 million more for health care providers at all levels, from hospitals to
independent practices to nursing homes to community mental health. That’s
getting pretty close to the full amount, but the governor has not spelled out
other proposals yet.
This
week, the House Speaker listed out assignments for our committees, with one
week to make our recommendations to our Appropriations Committee on how to use
the money so that we can pass a bill and get it to the Senate. Her figures show
a total of $575 million to be allocated in our “Phase 1” of rescue money after
deducting the $275 million “already spent” and the $400 million in reserve.
My
committee’s allocation for health care is roughly $175 million for health care,
with another $100 million for “Phase 2,” if we learn by September that we still
have not gained authority to use CRF money in the regular budget. We haven’t
been told exactly what the other committees have been given to work with, other
than that the economic development money is the other major bucket (in line
with the governor’s priorities), and that Human Services, Energy and Technology,
and Agriculture also have significant pieces of it for elements not included in
the governor’s plans. These are for such areas as child care, housing and
broadband development.
The
biggest immediate impact of the different approaches between the governor and
the legislature – that $400 million reserve amount – was evident this week when
we voted on the first quarter state budget. This budget only covers from July
through September so that we can have more certain numbers before creating the
full budget. The governor, based on current best estimates, proposed cutting
spending from last year by eight percent across the full year. That would
amount to bigger cuts than that, because upward pressures such as the state
employees negotiated salary increases will cut into it as well.
The
House budget proposes level funding instead (which will still mean a hiring
freeze), with a key argument that we shouldn’t begin making cuts when we still
know so little about our financial picture and how quickly the economy might
begin to rebound. What that means is that come September, if Congress doesn’t
change current rules so we can’t use the reserved $400 million, and the economy
doesn’t perk up more than currently estimated, that eight percent in cuts will
have to be spread over nine months instead of 12. That level of cuts would be
even more devastating to state services, with more layoffs and greater
reductions in every part of government.
Although
I believe it is right to hold back that $400 million “just in case” we can
rescue our budget with it, I think that’s a long shot. I think it’s an even
bigger long shot to think our revenues will do better than expected. So, I did
not vote to support the first quarter level-funding budget. I was only one of
five who did not go along with our Appropriation Committee recommended budget,
which had been a unanimous proposal by the committee.
***
My
committee has until Wednesday to propose how to spend the health care portion
of the federal relief money. A coalition of providers has aligned with the
administration’s proposal that it all go into one big bucket that the
administration will dole out on needs-based criteria through a grant process.
In
some ways, given the federal limits, it’s the only way to go. Whether it’s $175
million or $330 million, it still isn’t nearly enough to make up for the costs
of gearing up for COVID and the amount of health care revenues lost. When your
dentist’s office had to close, it had zero revenue, just like with any other
business. However, as essential as our entire business community is, we
particularly can’t let our health care providers go out of business or have hospitals
close down.
My
committee is looking at whether we can carve out small pieces of the money for
direct aid to people who have lost income and can’t pay for a doctor’s visit
and for some initiatives to begin to address health disparities. Our access to
health care is inequitable and thus health outcomes worse, when it comes to
minority populations: our Vermonters of color, migrants or immigrants, people
with disabilities, and those in the LGBTQ community.
“Small
pieces of money”: what a strange new world we are in, because for CRF money
that might mean $5 million. In our typical budget, we debate over programs that
cost less than $100,000, and we will be back at that when we start looking at
cuts in September.
“Water,
water everywhere, nor any drop to drink.”
***
A
few pieces of other business go on. I presented our health care committee bill
on the (virtual) floor last week. It was pared down from the 13 initiatives we
had been working on prior to March to the five we considered most essential.
I’m
particularly glad about one, because it’s the first step towards addressing a
real thorn-in-the-side for doctors: the pre-authorizations required by insurers
for certain tests or specialty referrals that add heavy administrative costs. The
bill puts insurers to work at developing two changes: cutting out the
requirements for services that are virtually always approved and cutting out
requirements for doctors whose requests are virtually always approved.
Other
main components in the bill included establishing a council to implement the
recommendations in a 10-year vision plan for finally fully integrating mental
health into a holistic (mind-body) health care system. The plan was developed
after “listening sessions” across the state and intensive work by stakeholder
who provide and receive mental health care. This council will be focused on
bringing the rest of the health care system to the table to review how to
achieve the goals.
Finally,
the bill adds some quality oversight requirements for the Brattleboro Retreat.
We have needed to bail it out financially, repeatedly (even pre-COVID) because
it provides more than half the inpatient psychiatric care in the state. There
was $7 million more in April and another $10 million coming in July. But there
have also been repeated quality concerns. This is Vermonters’ money being
spent; we want to protect the quality of care Vermonters receive there.
***
Please
continue to stay in touch with me and with Rep. Ken Goslant. We’re both here to
serve you, so contact us with questions or issues of concern. You can reach us
anytime at adonahue@leg.state.vt.us or kgoslant@leg.state.vt.us.
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