POLITICS
11/01/2011 06:13 pm ET Updated Jan 01, 2012

National Governors Association Asks Super Committee To Mind State Funds

WASHINGTON -- On Tuesday, the National Governors Association asked the congressional super committee on deficit reduction to keep state finances in mind when drafting deficit reduction plans.

In a letter to super committee co-chairs Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Texas), the NGA's top leaders specifically address changes to Medicaid funding and a spectrum auction for broadband services. The letter follows a previous one the NGA sent President Obama and congressional leaders in January -- before the committee's formation -- regarding state finances and federal deficit reduction. Tuesday's letter was signed by NGA chairman Nebraska Gov. Dave Heineman (R) and vice chairman Delaware Gov. Jack Markell (D).

"States face many of the same challenges and have made dramatic changes in their budgets," they wrote. "Several states are still wrestling with continued revenue shortfalls and some have called special sessions to make further spending reductions."

The majority of the letter addresses Medicaid funding, which the the NGA said equals 22 percent of state spending on average. Heineman and Markell outlined a series of proposals that they said would allow the states more flexibility in managing the program, and provide cost savings at both the state and federal levels.

"Specifically, improving the coordination of Medicare and Medicaid for beneficiaries of both would produce substantial benefits in care delivery and costs," the governors wrote. "As savings accrue from the joint program, they could be shared with both federal and state taxpayers."

Among the proposals from the governors were to exempt the federal government from a fee being charged on Medicaid managed care companies and other insurance companies starting in 2014, which they said would provide $10 billion in savings in 10 years for the federal government, along with state savings. Heineman and Markell said that federal government should allow states the flexibility to do things such as requiring prior approval for non-emergency imaging and limiting "provider charges" for out-of-area services to 110-percent of Medicaid rates.

The governors wrote that the imaging proposal could save the state and federal governments a total of $10 billion.

Heineman and Markell said the governors oppose ideas to blend federal matching rates for Medicaid, along with limits on the amount of state funds that can be matched by federal dollars. They wrote that these would limit the states' authority in running the Medicaid program, along with transferring more of the burden to state governments.

In the area of spectrum auctions, Heineman and Markell wrote that the NGA supports the idea, but is looking for a specific type, which they said would provide more for state revenues and promote public safety.

"Governors are supportive of incentive auctions as a means to raise revenue and provide opportunities to create the next generation of wireless service," they wrote. "We insist, however, that as part of any spectrum auction the Select Committee allocate the spectrum in the 700MHz band known as the D-block to public safety."

Heineman and Markell said this would assist state governments with plans to create a broadband wireless network for public safety. They endorsed the Public Safety Spectrum and Wireless Innovation Act, which is pending in Congress, as a framework for the super committee.

The Congressional Budget Office issued an analysis over the summer saying the proposed bill -- which has passed the Senate Commerce Committee -- would bring in $24.5 billion through the auction, while spending $18.0 billion to create the broadband network for public safety. As part of the spending, $250 million will be allocated to state and local governments for creation of the network. The CBO also wrote that the bill would decrease discretionary spending by $43 million from 2012 to 2016.

The super committee has until Nov. 23 to determine a final set of recommendations to cut $1.5 trillion from the federal deficit.