Stitt warns: State can’t afford SQ 802
June 23, 2020
Gov. Kevin Stitt said State Question 802, which would make Medicaid welfare benefits a constitutional right for hundreds of thousands of able-bodied adults, will increase financial problems in state government at a time when major budget shortfalls already loom on the horizon.
“We have a billion-dollar shortfall next year,” Stitt said. “The only way to get $200 million is either to raise taxes or to cut services somewhere else like education or first responders or roads and bridges. As governor, I’m not going to raise taxes on Oklahomans, so then you look at having to cut other services. That’s not good for Oklahoma.”
Stitt made those comments in a Facebook live event hosted Tuesday by Americans for Prosperity-Oklahoma.
Although supporters of Medicaid expansion have described the proposal as largely a federal program, expansion also requires increased state government spending. Stitt noted that SQ 802 includes no funding source for the state costs of expansion.
As a result, he indicated that the true cost of Medicaid expansion will be seen in cuts to other parts of government.
“In 802, basically all it says is ‘you will expand,’” Stitt said. “It’s part of the constitution. So the state, the Legislature, is on the hook for paying for this service. It doesn’t address how to pay for it. It just says you will provide that service, so really it’s bad for education, it’s bad for roads and bridges, it’s bad for any other state services, because where’s the $200 million come from?”
Facing a shortfall of $1.3 billion this year due to the COVID shutdown and falling oil prices, lawmakers resorted to propping up the budget with $886 million in mostly one-time funds. Stitt vetoed that budget, saying it relied too heavily on one-time funding and guaranteed a major shortfall again next year, but lawmakers overrode his veto.
Roughly $550 million of this year’s state appropriation for K-12 schools, or nearly 20 percent of the appropriation, was one-time money that will have to be replaced in the next two years. That task will become even more difficult if SQ 802 mandates hundreds of millions in additional new spending on Medicaid at the same time lawmakers are trying to replace those one-time education funds.
Stitt noted 800,000 people are already on Oklahoma’s Medicaid program, which currently covers children and the aged, blind, and disabled.
State Question 802’s Medicaid expansion could increase that number so much that one in four Oklahomans will be on the welfare program—and perhaps an even higher share. A previous study commissioned by the Oklahoma Health Care Authority, which administers Medicaid, predicted up to 628,000 Oklahomans would become Medicaid-eligible under expansion. Based on current Medicaid expenses, that translates into a state cost of $374 million annually. And those projections were done at a time when economic conditions in Oklahoma were better than they are today.
The “Yes on 802” campaign, which supports Medicaid expansion, does not address how to cover the additional state costs that expansion will create. Instead, the campaign declares, “Medicaid expansion is a cost-effective solution because we’re already paying for practically all of it.”
John Tidwell, state director of Americans for Prosperity-Oklahoma, noted state finances were a mess only two years ago and that lawmakers responded by passing huge tax increases. He questioned whether citizens want to return to that type of budget chaos.
“I would imagine that folks see the prospect of budget cuts and spending reductions and cutting money into the classroom and all of those things, that’s really got to concern them and it’s got to concern you too because you have to make those decisions,” Tidwell said.
“I don’t know why more people aren’t talking about it because the money doesn’t just appear,” Stitt responded. “We have to come up with $200 million. With unemployment increased because of COVID and the oil-and-gas (downturn), it could be more. We’ve got to come up with it somewhere. How do you come up with it? We already have a budget deficit. It’s going to come from cuts in other state agencies or tax increases. I’m not going to vote for a tax increase.”