Carl Bearden
You may recognize the quote from which the title of this blog was irreverently taken. Most people would incorrectly identify the quote from “The Treasure of the Sierra Madre” (actually used in “Blazing Saddles”), just as the federal government and many states incorrectly believe they don’t need a balanced budget. This is especially true in the bad times when many haughtily believe government spending is the answer to fiscal woes.
California is perhaps the poster child for this type of thinking. They increased spending even though they couldn’t support their current budget and then acted surprised they have to cut the budget! Fortunately, Missouri has a constitutional requirement that a balanced budget must be signed and maintained by the Governor.
Occasionally, despite the best estimates and efforts of the Governor and legislature, the budget is not sustainable given the revenue collections. So, what happens when revenues fail to match spending? Tough choices have to be made and under the state constitution, those choices are left to the Governor to maintain a balanced budget. Three main areas present themselves for reductions; education (principally higher education), hiring freezes and Medicaid reimbursements.
Higher education has the target on its back because it represents approximately $1 billion in spending that is not mandated by constitution or state law. The Missouri constitution does require the state to provide some level of funding to higher education. But unlike elementary and secondary education, the constitution does not mandate a level of spending.
Hiring freezes are somewhat painless and are most readily acceptable to the general public as most of them believe there are too many government employees anyway. There are usually exceptions made for “critical” positions but a significant number of positions can go unfilled. After years of growing the number of state employees, that trend has reversed in the last 4 to 5 years.
Medicaid reimbursements are the trickiest reductions to make. Few Governors want to be known as the one who cut Medicaid recipients. Governor Blunt took appropriate action a few years ago to reduce eligibility and fraud in the Medicaid system and it saved the system for the neediest in the state.
Other Governors have chosen to reduce reimbursement rates for Medicaid providers. After all, if anyone can absorb cuts, it is the “rich” doctors. Unfortunately, “rich” doctors don’t usually accept Medicaid patients. Medicaid providers have payrolls and families to support. Reductions in reimbursement rates leave those providing Medicaid service with the decision of losing even more money, Medicaid reimbursement generally fall short of the cost of the services delivered, or simply closing their practice to any new Medicaid patients. This has the same effect as reducing eligibility.
Budget reductions are never pleasant. They may not be entirely avoidable but they can be reduced by not making unwise spending decisions during the “good times” such as was done in the 1990’s. Spending limitations that allow for reasonable government growth and for putting aside savings for the bad times would be prudent but are not popular with most politicians. Bad times are inevitable. After all they don’t call it a business cycle for nothing!
