Citizens should ask about consequences of Governor’s proposed FY12 budget cuts
Proposed funding cuts in education and health care could SHIFT COSTS to property tax payers and individual health care consumers
Governor Rounds proposed FY12 budget cuts 5% of the funding for k-12 education and medical provider reimbursement (payments for nursing homes, hospitals and other medical providers who treat Medicaid patients). His budget does not, however, identify any decreases in the required quantity or quality of services provided. K-12 education standards remain the same. Medicaid eligibility is not decreasing nor are the types of medical services covered by Medicaid being limited.
This budget presents the South Dakota health care and education workforces with an ultimatum. Continue providing the same level of services with less money. That may not be possible. But school districts and health care providers each have an avenue to “shift their costs” to other sources to avoid decreasing the quality of their services.
School districts can ask their district voters to approve additional “opt-outs” of the state property tax limits. An opt-out increases taxes at the local level for all property owners in the district.
Health care providers “cost shift” by increasing the amount they charge non-Medicaid consumers of health care. This increases costs for private pay patients and the South Dakota businesses that provide health insurance for their employees. The amount “cost shifted” has to be more than twice the amount the state saves in Medicaid expenditures because when the state cuts its Medicaid payments it also looses the 59% federal matching funds (known as FMAP). Every dollar cut at the state level decreases federal matching funds by $1.44.
South Dakota elected officials don’t like to talk about raising taxes. But “shifting costs” from the state taxpayers to other subgroups of South Dakotans (property tax payers, nursing home residents, health care consumers) is just another way of funding public services without calling it a “tax increase”.
It would be helpful to have a budget process that included analysis sufficient to support frank, open discussion.
- How much does it really cost to continue providing current state services?
- Are there services we are willing to give up?
- How should we pay for the services we want to continue?
- Who should pay the costs?
Governor-elect Daugaard could add clarity to South Dakota’s budget discussions by including fiscal analysis that:
- projects the real growth of costs to provide existing services over an extended period (2-5 years) – a Current Services Report
- assesses how taxes are allotted among South Dakotans by income category – a Tax Incidence Analysis
- calculates the costs and benefits of tax rebates and refunds written into state law – a Tax Expenditure Report
A transparent budget process will only happen when citizens ask for it. For information on how to communicate with your lawmaker, click here.
