Report: 9 states May Lose Under Bush Plan

Nine states would receive less money from Washington, D.C., if Congress adopts President Bush's 2007 budget proposal, while most others would see modest increases in federal funding, a new analysis suggests.

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state-by-state breakdown
of federal funding to states.
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A preliminary state-by-state review of the administration's new $2.77 trillion budget proposal tags California, Hawaii, Massachusetts, Michigan, New Jersey, North Dakota, Oregon, Rhode Island and South Dakota as the only states that would see a drop in funds from major federal programs in 2007 under the plan.
 
The report by Federal Funds Information for States (FFIS), a subscription service that tracks federal payments to states, analyzed programs that account for roughly three-fourths of federal funding to states.
 
Because Medicaid reimbursements constitute the lion's share of federal taxpayer dollars funneled to states, the state-federal health care program that serves 53 million of the nation's poor, elderly and disabled is the main driver of the report's results, said FFIS Executive Director Marcia Howard.
 
Federal dollars to Massachusetts, for example, would decrease by about $827 million, or 10.9 percent, under Bush's plan, the largest percentage drop of any state. About $758 million of the decrease would come from a decline in federal matching dollars for the state's Medicaid program.
 
Minnesota would see the largest percentage increase — 12.2  percent, or $555 million. Medicaid payments actually would increase by about $610 million, but some of that increase would be offset by declines in other programs.
 
Massachusetts and Minnesota are the extremes; 44 states would see their federal funding increase or decrease by no more than 5 percent, according to the report, which reviewed a range of social service, education, transportation and other types of programs.
 
Howard said that changes in federal Medicaid funding also reflect state funding shifts because of a formula that guarantees the federal government picks up at least 50 percent of the health program's cost in each state.
 
In general, states that are attracting more people will fare better in most types of grants besides Medicaid because many federal grant formulas consider population, Howard said.
 
"You'll start to see a movement of funds out of the Northeast and Midwest into the South and the West as the population there continues to grow at above average rates," she said.
 
The Center on Budget and Policy Priorities , a Washington, D.C., group that focuses on policies affecting the poor, estimated in a report one day after Bush's proposal was released Feb. 6 that the president's plan would curtail $6.7 billion in state and local grants next year.  The center's report did not consider changes in federal Medicaid payments.
 
As part of Bush's campaign to halve the federal deficit — expected to reach an all-time high of $423 billion this year — by 2009, he has proposed squeezing savings from an array of domestic spending programs, while boosting funding for homeland security and national defense.
 
The administration hopes to squeeze $15 billion in savings by consolidating or eliminating 141 federal programs. Congress cut or eliminated 89 of the 154 programs Bush targeted for savings last year, and several of the survivors — such as loans for low-income college students and funding for vocational education — are back in the crosshairs this year.
 
"It's really a continuation of a trend we've seen over the last several years," Howard said of Bush's proposal.
 
FFIS, which is affiliated with the National Conference of State Legislatures and the National Governors Association , provides information to state officials nationwide.