Will Pawlenty turn down $263 million?

  • Article by: KEVIN DIAZ
  • Star Tribune
  • August 19, 2010 - 9:48 PM

WASHINGTON - Millions of dollars in health care funds seemingly destined for Minnesota after last week's emergency session of Congress have yet to clear a final hurdle: the signature of Gov. Tim Pawlenty, an outspoken critic of the new federal spending.

As part of a compromise to win support for the $26 billion state aid package, Washington lawmakers quietly included a requirement that governors formally certify the flow of federal medical assistance dollars to their states. The provision put Republican critics like Pawlenty on the spot.

At stake in Minnesota is $263 million for low-income and elderly Medicaid patients and health care providers who participate in the joint federal and state program.

Pawlenty, eyeing a run for the White House in 2012, said Thursday in an interview with the Star Tribune that he has not decided what to do.

"I haven't made a decision," he said. "We are still looking into it."

The bill passed by the Democratic- led Congress and signed by President Obama on Aug. 10 gives the states until Sept. 24 to certify their extra Medicaid allotments, essentially forcing governors to ask for the money -- or suffer the consequences. Minnesota, which faces a $6 billion budget deficit, also was allotted $167 million under the bill to preserve jobs of teachers and other public employees facing layoffs due to budget cuts. But those funds are not in jeopardy because they can go directly to school districts.

Pawlenty, like many Republican leaders in Congress, criticized the congressional action as part of a "reckless spending spree." All three Minnesota Republicans in the U.S. House voted against the bill, calling it a politically motivated bailout for public employees and their unions.

But so far Pawlenty has stopped short of saying Minnesota will reject the money, and his aides say state officials are still studying the federal legislation.

One question is whether the state Legislature could bypass the governor and apply for the health funds, though some policy analysts consider that unlikely.

Meanwhile, social service advocates are calling on Pawlenty to take action to make sure the state does not forfeit any federal medical assistance money under the bill.

"We simply cannot afford to leave $263 million in new federal Medicaid money sitting on the table while other states take their share," said Steve Francisco, federal policy director for the Minnesota Council of Nonprofits' state budget project, which tracks federal spending on social services.

Francisco noted that the bill was paid for by making "other painful cuts" in spending, so that it will not increase the federal deficit. The offsets include closing tax loopholes and a reduction in extra food stamp benefits that had been scheduled to take effect in 2014.

A political hot potato

The state aid package has been a political hot potato since House Speaker Nancy Pelosi, D-Calif., called on the House to approve it in a rare one-day August session, scarcely three months before crucial midterm elections that are expected to turn on jobs and the state of the economy.

Pawlenty recently refused to sign an application from the Minnesota Commerce Department that would have brought a $1 million federal grant, available to all states, to crack down on excessive health insurance premium increases.

"It's not as if Minnesota has a surplus of money," Sen. John Marty said in a statement Thursday criticizing Pawlenty.

The state Health Department is set to apply for another $1 million in planning funds for health insurance exchanges, due Sept. 1. The paperwork is with the governor's office awaiting his decision on how to proceed, health department economist April Todd Malmlov said Thursday. The department has applied for three other federal grants totaling $6.7 million.

"I worry about the trend of conservative governors saying no, we're not doing [federal] health reform," said Lynn Blewett, a professor at the University of Minnesota's School of Public Health, who tracks state health coverage.

Kevin Diaz is a correspondent in the Star Tribune Washington Bureau. Staff writer Chen May Yee contributed to this story.

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