Pawlenty to take $260M in federal Medicaid cash

Gov. Tim Pawlenty doesn't want Minnesota to accept federal funds from the health care overhaul he strongly opposes. But he has notified federal officials that he wants Minnesota's share of health care money that comes from a stimulus program.

Pawlenty's chief fiscal advisor told a legislative panel today Tuesday that the $260 million in Medicaid funding would provide a needed cushion to the state's dwindling cash flow fund.

State Democratic lawmakers, however, remain concerned that the Republican governor is turning his back on a significantly larger pot of federal health care money.

Pawlenty sent a letter to Health and Human Services Secretary Kathleen Sebelius requesting money that Congress recently extended as part of the federal stimulus. The letter comes one week after the Republican governor ordered all state agencies to not participate in the federal health care overhaul.

State Management and Budget Commissioner Tom Hanson said the governor is applying for the extension of Medicaid funding because it's from a long-established federal program.

"He has said that the federal health care reform, he's going to take a closer look to make sure that any money we apply for under that law is consistent with the direction he thinks Minnesota should go in and that it's in our best interests," Hanson said.

Hanson tried to explain the standards for determining those best interests when he appeared before members of the Legislative Commission on Planning and Fiscal Policy.

House Majority Leader Tony Sertich, DFL-Chisholm, acknowledged that there are still a lot of details to work out when it comes to the new federal health care law. But Sertich stressed that Minnesota's best interests should include trying to obtain its $1 billion share of that federal money.

"There are a lot of questions hanging out there. I don't know all the details of all this. Most Minnesotans don't," Sertich said. "But what most Minnesotans know, and I think the governor has stated on occasion, is we should get our tax dollars back from Washington. And if there are questions out there, I don't care. We just want our money back in Minnesota."

Sertich and other Democrats have accused Pawlenty of putting his own presidential ambitions ahead of Minnesota's health care needs. But Pawlenty has said he is simply trying to slow down what he views as an intrusive federal mandate.

During the commission meeting, State Rep. Mark Buesgens, R-Jordan, argued that the state shouldn't always be eager go after federal money.

"If that means growing an ever larger government sector, if that means taking more money out of the pockets of our working men and women, then that indeed is not in our best interest," Buesgens said. "We should be seeking other measures by which we can get our tax dollars back. So, I do appreciate the stand the governor is taking."

The questions about federal health care money came during a broader discussion of the state's fiscal health. Hanson outlined a list of budget moves his department will soon begin soon to prevent the state's cash flow account from dipping into the red by the end of the year.

Sales and corporate tax refunds over $5,000 will be delayed, as well as the payments to school districts and the University of Minnesota. State officials are also finalizing an agreement with U.S. Bank to take out short-term loans if necessary, to pay the bills.

After the commission meeting, Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said the governor will leave office with state government Minnesota in a big financial jam.

We're back borrowing from the schools at the end of his term," Pogemiller said. "In addition, it's pretty clear that the next executive is going to have to probably do some short-term borrowing to make up for the problems that were left. When you get into March and April, even with all of this, there's a negative. So, I think this is not a fiscal condition you'd like to see your state in."

Pogemiller said the next governor could face an easier financial road if for some reason state tax revenues take off in the next four or five months. He quickly added that doesn't appear likely.

Lawmakers will get a clearer picture of state finances when the next economic forecast comes out, about a month after the November election.