Leaders of the National Governors Association (NGA) and the National Conference of State Legislatures (NCSL) have called on congressional leaders and the Administration to take early action to stabilize the nation's economy.
Twenty states already have cut $7.6 billion from their fiscal year (FY) 2009 budgets, and 30 states have identified additional shortfalls totaling more than $30 billion. Twenty-five states also have identified shortfalls of $60 billion for FY 2010. However, these numbers tell only a portion of the story, with previous budget actions and the continuing downturn producing cumulative budget gaps of more than $140 billion for FY 2009 and FY 2010. Additionally, states feel the greatest impact on their budgets in the year after a recession ends, primarily because Medicaid growth occurs late in the recession and employment growth lags the recovery. Thus, the repercussions of this downturn will last for several years--and will be much worse without swift action.
The governors and state legislators are calling on the federal government to look to existing federal-state programs because these programs are on-going and therefore the funds can be obligated quickly and expedited efficiently. They specifically request that an economic recovery strategy include a temporary enhancement for at least two years of the Federal Medical Assistance Percentage, which determines the federal government’s share of state Medicaid expenditures.
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