The “Extraordinary” Power of the Legislative Pen
The 2010 state budget fully displayed the Legislature's ability to make huge changes with just a few words. The North Carolina General Assembly was well into its budget process when word began to come out of Washington, DC that Congress might not authorize an extension of the enhanced Federal Medicaid Assistance Program (FMAP) originally passed under the American Reinvestment and Recovery Act (ARRA). That’s a bit of alphabet soup that could mean something huge for North Carolina -- $518 million dollars that state budget writers were counting on would be gone from the coffers.
Rather than completely restart the budget process, House and Senate leadership decided to come up with a contingency plan during final negotiations. Out of the final budget’s nearly 400 pages (the legislation and the money report) came just a few lines, under the title “Extraordinary measures to address the potential loss of federal funds.” Just a few lines that prioritize cuts representing 2.7 percent of the budget:
(1) Transfer from the Disaster Relief Reserve Fund established in S.L. 2005-1 $ (30,000,000)
(2) Transfer of unclaimed lottery prize money and excess receipts (35,000,000)
(3) Use of interest from all other funds (50,000,000)
(4) Use of balance in General Fund Availability (23,469,157)
(5) Reduction of Medicaid Provider rates (26,618,975)
(6) Use of funds from the Savings Reserve Fund (37,307,714)
(7) Reduction in Retirement System contributions (139,000,000)
(8) One percent (1%) Management Flexibility Reduction (177,500,000)
It’s looking increasingly likely that Congress won’t come through with FMAP funding, leaving dozens of states with budgets to adjust. The above list is the order in which North Carolina will make its cuts, with the last $177 million in cuts being left up to individual agencies.
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