ST. PAUL, Minn. (AP) — Senate Republicans united Wednesday to approve deep cuts to health and welfare programs and a ban on state spending to support the federal health care overhaul, aiming to blunt the fastest-growing part of Minnesota’s budget.
The bill would reduce projected spending on health and social service programs by $1.6 billion over two years, a key part of the GOP plan to plug a $5 billion shortfall. It cleared the Senate on a party-line 37-26 vote. The proposal seeks to slice into spending on items as large as the Medicaid health care program and as small as subsidized coverage for eyeglasses and mental health grants for children.
The vote came hours after the Senate passed a cost-cutting bill that freezes government worker pay, alters state employee health insurance and slashes budgets for most agencies. The two bills join several other budget measures moving through the Legislature this week. Majority Republicans insist they won’t raise state taxes, as Democratic Gov. Mark Dayton recommended.
“We are not alone in trying to change health care in this country,” said Sen. Michelle Benson, R-Ham Lake. “Minnesota does a good job and all the good things we’re trying to do are being crowded out by federal mandates.”
One of the health bill’s most debated provisions would require the state to seek federal permission to overhaul parts of health coverage bound by federal requirements, substituting current health plans with subsidies to buy private insurance. Democrats flatly predicted there would be no federal waiver and questioned $600 million in savings the bill counts on from that provision.
“You can’t simply budget a hope,” said Sen. Dick Cohen, DFL-St. Paul.
Human Services Commissioner Lucinda Jesson warned legislators against banking on the federal permission, while predicting the subsidy approach would throw 86,000 people, including families with children, out of insurance because of cost-sharing and other difficulties.
“We may disagree on the wisdom of certain policies, but we jeopardize the fiscal stability of our state if we ignore the realities of federal funding,” Jesson said in a letter to Hann.
Another measure in the bill would roll back a Medicaid expansion Dayton ordered early this year in his first act as governor. Dayton threatened in January to veto any legislation standing in the way of that move, which extended more generous health coverage to 100,000 vulnerable adults.
Jesson said those patients could conceivably become uninsured, too, because the bill doesn’t offer hospitals enough money to participate in a revived version of the state-paid General Assistance Medical Care program.
The Senate health bill differs significantly from a House companion expected to get a vote in the coming days. Both bills are due to land in a conference committee.
Meanwhile, the Senate’s state government finance bill — approved 36-29 — is notable for the size of its cuts: Minnesota would spend nearly 60 percent less than anticipated on state agencies and employees than before. And it comes in about $500 million leaner than Dayton proposed last month.
The bill depends on several steps to cut the cost of doing government business and on the state’s ability to gain revenue by rooting out tax cheats. Democrats argued that Republicans were being too rosy in their savings projections, with one saying the GOP would be better off trying “to find the pot of gold at the end of the rainbow.”
Republican Sen. Mike Parry of Waseca chafed at comments the bill relies on phony savings and said Minnesota can’t get by without wholesale changes in government operations.
“What are we afraid of in looking?” Parry said. “Isn’t that what we owe our citizens? Aren’t we supposed to look at new ways of doing things?”
Among the changes the bill would bring:
— The executive branch would be forced to trim the employee ranks by 15 percent by 2015, either through early retirements, layoffs or broad restructuring.
— State workers wouldn’t see any pay raises for another two years after having largely flat salaries for the last two.
— State employee health programs would be audited to weed out ineligible dependents, and every worker would move to high-deductible insurance plans with costs partially offset by state contributions to health savings accounts. Preventative care would be fully covered by the state.
— Special boards that assist ethnic minorities would be consolidated, with the exception of an American Indian agency.
— Most state agencies would see 10 to 15 percent cuts to their operating budgets. Military and veterans affairs agencies are spared from those cuts.
Dayton’s agencies warned that they would reduce services and close offices, resulting in tax refund checks being issued slower.
Senate Democrats predicted agencies won’t be able to meet their budget targets without massive layoffs.
“It goes way too far. In fact it’s a job killer,” said Sen. Chuck Wiger of North St. Paul. “A job is a job if it’s in public (sectors) as well. They pay taxes. They contribute in the community. They pay mortgages. They buy groceries.”
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