Another Daunting Gap in the Budget

Katy Grimes: Facing another unexpected gap in the state budget, California legislators have even more budget decisions to make, and soon.

On Thursday, Congress passed HR 4213, the Unemployment Compensation Extension Act of 2010, setting a new filing deadline, which allows long-term unemployment claimants to continue receiving benefits. However, the recent extension of the Unemployment benefits does not include any additional money to states for the Federal Medicaid Assistance Program (FMAP).

And California legislators have counted on receiving this money from the feds. So now, what happens without it?

Legislative staff explain that the Governor’s budget proposal included approximately $1.7 billion in federal funds from the extension of the temporary increase in Federal Medicaid Assistance Program (FMAP).

The FMAP refers to the share of states’ Medicaid programs (Medi-Cal in CA) that the feds pay. Normally for Medi-Cal it’s 50%, but the federal stimulus package (ARRA) increased the percentage for every state temporarily beginning in 2008. The increase is set to expire December 31, 2010, without some action to extend it.

Without the extension, California has to find additional budget solutions to fill the gap, which is precisely the problem with temporary funding… it has to end sometime or risk becoming a permanent entitlement.

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  1. John Seiler
    John Seiler 23 July, 2010, 15:25

    Hey, let’s increase taxes again! Doing it last year prevented another budget deficit. Oh, wait. Never mind.

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