Saturday, April 24, 2021

Evers budget adjustments include Foxconn, and $1 billion bonus for Medicaid expansion

On Friday, Gov Evers' Department of Administration sent over a list of corrections to the state's budget bill to the Joint Finance Committee. Some of these are corrections and clarifications of "oopsies" that were in original budget bill, and this happens with every 2 years. But many reflected that there have been a lot of developments in the last two months, both in Madison and in Washington DC.

The change that's getting a lot of attention from media outlets complements the news from earlier in the week that the state's jobs incentive contract with Foxconn has been renegotiated away from the absrudity that was signed by ex-Gov Scott Walker. It
As you are aware, the terms of the agreement with Foxconn for receipt of awards under the EITM Zone were renegotiated by the Evers Administration and approved by the Wisconsin Economic Development Corporation Board on April 20, 2021. This renegotiation will save taxpayers $2.77 billion compared to the previous contract.

To reflect the recently updated contract terms,we respectfully request that the estimates for the EITM Zone refundable credits be updated to reflect an anticipated expenditure of $37.4 million for the 2021-23 biennium, with up to $29,100,000 in the fiscal year 2021-22 and up to $8,300,000 in the fiscal year 2022-23.
Which indicates that the Evers Administration thinks that Foxconn could meet some of the minimum job thresholds and capital improvement incentives. As the Wisconsin Budget Project's Tamarine Cornelius lays out, this was how the state was able to drop billions off of its potential exposure to Foxconn and lowered the % of salaries and capital improvements paid.

Several of the changes that the Evers Administration requested of LFB had to do with the fact that bills have already been passed to take care of these budget items. This includes some "federalizing" of tax codes to match changes made by Congress, increases to pay for public defenders, and additional oversight of pharmacy benefit managers and related measures on price transparency for drugs.

And of course, the Evers Administration reminds the JFC about the extra money that could be saved by expanding Medciaid, now that the Biden stimulus package is in effect.
Subsequent to the Governor's budget bill submission, President Biden signed the American Rescue Plan Act (ARPA) into law on March 11, 2021. Under the act, any non-expansion state that expands Medicaid under the federal Patient Protection and Affordable Care Act would receive a 5 percent increase to their state's Federal Medical Assistance Percentage for two years.

This paragraph accounts for the fiscal impact of the Medicaid expansion provision of ARPA on the Medicaid provisions in the Governor's budget. The appropriation under s.720.435(4)(b) should be reduced by $529,500,200 GPR in the fiscal year 2021-22 and by $509,421,800 GPR in the fiscal year 2022-23.
Which means that Evers' budget has another $1.04 billion of savings built into it. And means that $1.67 billion in extra state spending would get added back to the budget if/when the GOPs on Joint Finance refuse to adopt Medicaid expansion.

The last public hearing on the state budget will be done virtually next week, and then the real games begin in May at the Capitol. But there is plenty that has changed between February and today, both in laws and in the availability of funds, and these are likely to be far from the final last changes we see as the budget works its way through the process.

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