After it became apparent to most House members that the Senate President had no intention of reaching a compromise on the Medicaid budget problem, the House gave final passage in special session late Thursday night to a Medicaid funding bill that would fix Kentucky’s $139 million 2011 Medicaid shortfall without- according to a promise made to House members in writing by the governor- exacting across-the-board cuts in education placed in the bill by the Senate earlier in the day.

The Senate had amended House Bill 1 to include immediate across-the-board cuts to most of state government as well as cuts to per pupil “SEEK” funding for K-12 education and public colleges and universities that would take effect next January. Certain that no compromise on the bill would soon be reached with the Senate--and having received written assurance from Gov. Steve Beshear that he would veto all the cuts inserted in the bill by the Senate--the House voted in a bipartisan 86-2 Thursday evening to pass HB 1 as amended by the Senate which would give the governor the flexibility he has requested to manage funding problems with the state Medicaid program administratively through fiscal year 2012.

House leaders spoke about what they called the “procedural vote” on the bill before the final vote on HB 1 was tallied. They explained that they needed to find, and approve, a solution to the fiscal year 2011 Medicaid shortfall by April 1 to avoid a drastic 35-percent cut to the program. They said they didn’t expect to be able to reach a compromise on HB 1 with the Senate (an impasse on similar legislation during the 2011 Regular Session led to the current special session). And they expressed confidence that the governor would keep his word to line-item veto the Senate cuts and manage Medicaid in keeping with House intent -- especially, no cuts to education.

Some members expressed concern about the non-conventional vote, but others were very optimistic, saying it would move the process forward and lead to a final product reflecting what's best for the Commonwealth. Personally , I saw no other way to end the impasse which has been costing the taxpayers $62,000 each day we are in session.

HB 1 began as a bipartisan bill in the House to allow the governor to fill a hole of up to $139 million in this fiscal year’s Medicaid budget by moving $166 million in Medicaid money from fiscal year 2012 to the current fiscal year. The $27 million or so remaining after the reported shortfall amount is filled would allow the state to take full advantage of an enhanced federal Medicaid match, saving the state approximately $12 million, House budget leaders explained. Testimony from state Medicaid officials assured lawmakers over the past several days that any hole left in next fiscal year’s Medicaid budget by moving the $166 million forward would be filled by expected savings from expanded Medicaid managed care.

Once the Senate cuts are vetoed by the governor, HB 1 will appear much like the version of HB 1 that passed out of the House with a bipartisan vote of 94-4 on March 21. That version included no cuts for the current fiscal year and no cuts to SEEK or public colleges and universities, period. It did include language that would have triggered cuts across state government (except in the areas of education I have mentioned and a few other areas exempted by the bill) for fiscal year 2012 should the governor certify that he could not meet required Medicaid savings—language that is not in the bill sent to the governor on Thursday.

Provisions included by both the House and Senate in HB 1 to limit the governor’s ability to restructure debt this budget cycle and require the governor to meet $169 million in already-required efficiency savings next fiscal year through contract reductions and non-merit employee reductions remain in the bill. Also remaining is a provision that would require any surplus state revenue be put in the state’s “rainy day fund”—or Budget Reserve Trust Fund used to meet unanticipated government expenses—and a provision that moves $18.9 million in post-secondary education funding from fiscal year 2012 to fiscal year 2011.

Not much time has passed since the March 9 close of the 2011 Regular Session. The regular session ended with the General Assembly’s passage of 102 bills and 379 legislative resolutions. Of the bills that passed, 99 became law, including 28 Senate bills and 71 House bills. There were many accomplishments among those bills, including measures that protect our elderly, improve our criminal justice system—as well as the cost to operate it—and dozens of other areas.

You can catch up on all the legislative action on bills of interest to you from this 2011 First Extraordinary Session by logging onto the Legislative Research Commission website at www.lrc.ky.gov or by calling the LRC toll-free Bill Status Line at 866-840-2835. For committee meeting schedules, please call the LRC toll-free Meeting Information Line at 800-633-9650. Or, to comment on a bill, please call the toll-free Legislative Message Line at 800-372-7181.