WASHINGTON — Washington Gov. Chris Gregoire warned Monday that unless Congress acts quickly to provide $23 billion in additional Medicaid funding, Washington state may have to lay off up to 12,000 workers.
In a letter to the state's congressional, Gregoire said the state was counting on the $480 million it expected to receive from the federal government through the Federal Medical Assistance Percentage program. Absent the federal funding, the governor said, she would be forced to call a special session of the Legislature.
If the Legislature acted quickly to fill the budget deficit, the state might have to cut 6,000 jobs. If the Legislature waited until January when it regularly meets, the state might have to cut 12,000 workers, Gregoire said.
"If the extension is not realized, the state will not only be unable to provide medical services to thousands of families, but would likely see a loss of thousands of jobs as across the board cuts would be a likely response," Gregoire said.
State lawmakers set aside a $450 million cushion when they balanced the state's budget earlier this year. Without the federal funding, the reserve fund would be wiped out, and if state revenues declined further, cuts and layoffs might loom. Gregoire did not mention the contingency fund in her letter.
The chairman of the Senate Finance Committee, Sen. Max Baucus, D-Mont., is expected to release as early as Tuesday his version of a tax bill that will include the additional Medicaid funding. The Senate could take up the bill by week's end.
Before the Memorial Day recess, the House approved a version of the bill that did not include the extra money.
"This is critically important," said Sen. Patty Murray, D-Wash. "We have to live up to our responsibilities."
With the Senate needing 60 votes to do anything, Murray said, so many states are impacted that Democrats may pick up some Republican votes.
If the funding gap were not closed, Murray said, the state Legislature could wind up "laying people off and kicking people off health care."
Originally the Federal Medical Assistance Percentage money was included in the massive economic stimulus bill approved by Congress last year. The states needed the funding because their Medicaid rolls were growing as a result of the recession. Medicaid provides health care to low-income people.
But as anxiety over the burgeoning federal budget deficit spreads across Capitol Hill, a growing number of lawmakers are demanding that additional spending be offset with cuts elsewhere in the federal budget.
Forty-seven governors, including Democrats and Republicans, wrote congressional leadership earlier this year urging additional funding.
"Unfortunately, the length and depth of the recession means states and territories will continue to face significant budget shortfalls long after the enhanced FMAP provisions expire at the end of this calendar years," the governors wrote.
Gregoire has not only been lobbying the state's congressional delegation, she spoke last week with Senate Majority Leader Harry Reid of Nevada about the situation.
Washington state is not unique in relying on the additional federal Medicaid dollars to balance its budget.
The National Conference of Legislatures reported that 30 states, with both Democratic and Republican state legislatures, assumed the additional federal Medicaid funds when they balanced their budgets, Gregoire said.
Without the federal funding, Gregoire said the economic recovery might stall as laid-off state workers would seek unemployment benefits and some would apply for Medicaid. That would put a further strain on state budgets.
"Removing this source of economic stimulus at this stage of our fragile economic recovery presents significant risk," the governor said.