Crunching numbers
DHHS red ink sparks crisis
- Second emergency budget drafted
- Officials trade blame
The Department of Health and Human Services continues to rack up both potential and actual financial problems, plunging the agency further into the red and triggering the second emergency supplemental budget for the fiscal year ending June 30.
“The outgoing leadership at the Department of Health and Human Services failed to share information that my team needed to make budget decisions,” Gov. Paul LePage said. “They also failed to develop plans to address severe problems with their new payment systems despite requests for guidance from providers.”
The largest of the new budget problems is an audit by the U.S. Department of Health and Human Services’ Office of Inspector General for Medicaid payments for school-based services from 2006 to 2008. The audit notice was dated Nov. 19, 2010, but LePage said no one on his transition team was notified. The total federal dollars that could be in question over the audit period total $138.9 million.
Former DHHS Commissioner Brenda Harvey denies her office failed to tell the incoming administration about the audit letter. She said it was on a list of potential problems for the new commissioner prepared before she left the post. She said audit notices are routine in the agency and that the findings of the auditors are what’s important. An audit can take months or even years to complete, and then there are opportunities for the state to question the findings, she said.
Meanwhile, the state auditor has raised concerns about $11.7 million in claims made through Medicaid to take advantage of higher matching rates put in place by the federal recovery act. State Auditor Neria Douglass is questioning the practice of processing the adjustments at higher federal match rates than those in place when the original claim was made, which could result in the state being required to pay back some of the amount. “This is not a completed audit finding,” she said. “This is a draft that was sent to DHHS for their comment.”
She said the document released by the governor’s office is a “confidential working paper” prepared by one of her audit staff. The final audit will be completed by the end of the month.
“This is very disturbing,” said Sen. Richard Rosen, R-Bucksport, co-chairman of the appropriations committee. “To have another issue arise from the federal government, from the Office of Inspector General, and an issue arise locally, from our own state auditor, on top of what we have already been made aware of, is now beginning to cause some very serious concerns in both the short term and the long run.”
Finance Commissioner Sawin Millett said the $64.9 million emergency supplemental budget plan redirects funds to pay for the shortfall, mostly at DHHS. The first supplemental emergency budget totaled $151 million.
Poliquin seeks control over bonds
- Bill beefs up voter approval
- Law would boost treasurer’s authority
State Treasurer Bruce Poliquin has submitted legislation to expand his role in fiscal oversight and require more voter approval of state debt.
“The governor feels, and I agree with him, that anytime the word ‘Maine’ is attached to a bond, that the moral authority is attached to these bonds, then the voters should decide about adding that debt,” Poliquin said. He said he understands the position of many of the independent boards and authorities he serves that from a strict legal point of view, the agencies can issue bonds legally. The issue for lawmakers is to find the right balance between voter oversight of bonds they might ultimately be called on to fund and the laudable goals of the borrowing agencies, he said.
Poliquin said his proposal would require all bonds issued by state-created agencies to be approved by voters, unless the Legislature specifically exempts them. Lawmakers have a valid concern that under current bond-issuing procedures, many elections would have to be scheduled to send bond proposals to voters, Poliquin said. “We are exploring ways to authorize multiple bond proposals at the same election, maybe authorization for a couple of years,” he said.
Rep. Emily Cain, D-Orono, the House minority leader, said the legislation is sweeping in its expansion of voter approval requirements and a provision that would give the state treasurer sole authority to allocate tax-exempt bonding authority given to the state under federal law. “To me, this really undermines the authority of the boards set up to oversee the bonding for their programs.”
Poliquin said the treasurer should have a greater role in determining the allocation of what are called “private activity” bonds, used for student loans, housing and economic development programs. “The intention here is not to grab more authority by the Office of [the] Treasurer; some have said ‘power,’” Poliquin said. “It is to make sure there is an additional layer of oversight when it comes to the allocation of this ability to issue tax-exempt bonds.”
LePage threatens budget veto
- Says his priorities must stay intact
- Tax breaks, welfare and pension reforms crucial
Gov. Paul LePage says he’ll veto the two-year state budget unless it stays very close to the measure he proposed, insisting he won’t budge on the amount of tax cuts or his plan to reform pensions and welfare programs.
“If that budget is altered, it is not my budget, it is the Legislature’s budget,” he said. “If they alter the pension [reforms], if they alter the tax breaks, if they alter the welfare reforms, those are the show stoppers.” LePage said he will veto the budget if the Legislature passes a measure with any of those items changed, adding that he has made his position clear to legislative leaders of both parties. “If they send me that, as is, I will sign it tomorrow,” he said.
But he acknowledged that won’t happen, and said he’s willing to discuss how tax cuts are achieved, but will not budge from a total tax relief level of $203 million over the two-year budget.“I am not against listening to any proposal they have, but I have not seen anything given to me that says, ‘We would cut this for this,’” he said. “Of course the governor is like a parent — the last one to know.”
While the governor said he had informed lawmakers of his position, his comments about a veto were met with surprise and disbelief. “He said that to you?” said Senate majority leader Jonathan Courtney, R-Springvale. “We are now in the position that we are going to need a two-thirds [majority] budget, so we are going to do our best to negotiate a budget that takes his concerns into account. We share a lot of his priorities. But we are not drawing any lines in the sand.”
What triggered LePage’s comments was a meeting of the Legislature’s taxation committee to get feedback from the state’s business community on the governor’s proposals to reduce taxes. He heard from several business leaders that not all tax breaks are equal when it comes to spurring job creation, and lawmakers should consider changes. “Each of these affects businesses in different ways,” said David Clough, Maine director of the National Federation of Independent Business.
Mal Leary runs Capitol News Service in Augusta. He can be reached at editorial@mainebiz.biz. Read more of Mal’s columns here.
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