State Agencies Asked to Propose FY 2011 Budget with Additional 20% Cuts from Current Budget

While still absorbing draconian cuts in the only recently resolved FY 2010 budget, Michigan’s state agencies have been directed to provide proposed budgets to the Governor for next fiscal year that include an additional 20% cut. This request is based on the fact that federal stimulus funding available to plug a number of holes in the current budget will not be available to prop up next year’s budget and distressing predictions about the continuing inability of state revenues to support state expenditures.

Aging services have, like many publicly funded programs, already been hit hard. Funding for programs funded by the Office of Services to the Aging has been reduced 18 percent from $40 million to $33 million in the past few months. Those services include meals, home care, caregiver services and senior volunteer programs. Most Area Agencies on Aging, the agencies that receive these funds to provide services, have not yet determined how they will absorb the cuts or whether current recipients of services will be terminated from programs. Almost all Medicaid providers face eight percent reductions in reimbursement rates. Nursing home providers, like most Medicaid providers, now face an 8% reduction in reimbursement which will likely lead to decreases in staffing, supplies, and the quality or availability of food for residents. Reductions in reimbursement to doctors, combined with physicians’ frustration with the state’s new computer systems for provider payments and for eligibility determinations, may lead more doctors to refuse to serve Medicaid beneficiaries. Funding for other services of tremendous importance to seniors including mental health, dementia services, pone of revention and other services have also been cut or eliminated. In fact, one of the few winners in this year’s budget cuts is home and community based care. The MiChoice Home and Community Based Care program received a substantial increase in funding and Home Help workers received a 50 cent/hour wage increase.

The current cuts and the necessity for significant additional cuts next year arise from the Legislature’s inability to agree on any revenue enhancements. Thus, this year’s budget was accomplished solely by cuts in state expenditures despite some discussion of several possible revenue enhancement measures that would have reduced the need for cuts to essential services and programs. Moreover, many observers believe that the current budget is based on unrealistic assumptions and that supplemental appropriations will be necessary to meet the state’s obligations this year.

The chances of restoring funding that was cut this year or avoiding hideous cuts next year are quite bleak unless the Legislature agrees on revenue enhancements. And there has been little reason for optimism on that score.