Rendell takes Medicaid concerns to Washington

2 cols deck headline predicts disaster

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WASHINGTON -- On Capitol Hill to cajole members of the Pennsylvania delegation, Gov. Ed Rendell on Wednesday predicted 25,000 layoffs in the commonwealth if a controversial spending bill doesn't pass Congress.

The American Jobs and Closing Tax Loopholes Act, known as the tax extenders bill, comprises a variety of proposals -- but the one most important to Pennsylvania is a six-month extension of federal matching funds for state Medicaid programs.

If the state doesn't get the additional $850 million in Medicaid assistance, adoption of a 2010-11 budget will become even more difficult than it already is. Mr. Rendell wants to spend $29.1 billion for the year beginning July 1, which is considerably larger than the current state budget of $27.8 billion.

Mr. Rendell's new spending proposal is balanced by the inclusion of the so-called Federal Medical Assistance Percentages, or FMAP, money, so if Congress doesn't approve it, the state budget will be considerably out of balance. That would complicate budget talks with Republicans, who control the state Senate and who are demanding that Mr. Rendell trim his 2010-11 budget plan to $27.5 billion.

These disagreements are leading some legislators to figure they'll be in Harrisburg all summer, as they were last year.

As Mr. Rendell summed up at a Capitol news conference, losing the federal boost "would have a debilitating effect on us."

An extension for the first six months of the fiscal year already has passed, so this extension would be for the second half of Mr. Rendell's budget.

Mr. Rendell noted that more than 30 other states -- with governors from the left, right and center -- have already budgeted the extra money, and failure to pass it would have far-reaching effects. Aside from layoffs to teachers, emergency workers and others, Mr. Rendell said he might have to close state parks.

Both houses of Congress are weighing the tax extenders bill and a supplemental funding bill for the war in Afghanistan this week, with a Memorial Day recess ahead. The hefty price tags on the two bills -- $123 billion over two years for a preliminary version of the tax extenders and nearly $37 billion to $59 billion for the war -- have Republicans and many moderate Democrats concerned, as the national debt hit a grim milestone Wednesday: $13 trillion.

Rep. Chris Van Hollen, D-Md., a member of the party leadership, appeared at Mr. Rendell's news conference and said his body and the Senate still are adjusting the tax extenders bill so the two chambers are "on the same page." One area of negotiation is the size of the so-called "doc fix" -- a large reversal of scheduled cuts to Medicare reimbursements to doctors that was not included in the health care overhaul bill in part because of how costly it is.

Still, Mr. Van Hollen emphasized the tax extenders bill is an important piece of the Democrats' jobs agenda, and the heads of the Service Employees International Union and American Federation of State, County and Municipal Employees participated at the news conference to hammer home the point.

The bill would extend expiring tax breaks, unemployment insurance and COBRA health insurance, close overseas tax loopholes and expand the Build America Bonds program for local infrastructure improvements, among other proposals.

Harrisburg Bureau Chief Tom Barnes contributed. Daniel Malloy: or 202-445-9980. Follow him on Twitter at PG_in_DC.


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