WHEREAS:
The bursting of the housing bubble, rising unemployment and the resulting drop in tax revenues--combined with a slowing national economy and years of federal underfunding of state and local programs--have contributed to a growing  budget crisis in state and local governments across the country; and
WHEREAS:
Currently, more than half the states are struggling to fill budget shortfalls totaling at least $40 billion and, as the economy continues to get weaker, more states, counties and cities will face budget gaps and existing budget gaps will grow; and

WHEREAS:
Nearly all states are prohibited from running deficits or borrowing to close the gap between revenues and expenses, so they are resorting to such harmful measures as cutting aid to local governments, reducing services, and laying off workers; and 

WHEREAS:
When state and local governments cut vital public services, that further exacerbates an economic downturn; and

WHEREAS:
During an economic downturn, demand for Medicaid goes up as more people fall into poverty, lose their employer-provided health insurance coverage and become uninsured; and

WHEREAS:
Medicaid represents the largest source of total state expenditures, at 21.5 percent of total state spending; and

WHEREAS:
For public hospitals, Medicaid funds represent on average 20.2 percent of net patient revenues and is vital to maintaining adequate staffing levels; and

WHEREAS:
During the last recession, states adopted a range of cost-controlling measures which had an immediate effect on Medicaid spending, however, during this recession states will have fewer options to slow spending and may adopt Medicaid cuts that could directly affect eligibility, coverage and payments to hospitals and other providers; and

WHEREAS:
The Bush administration has proposed a series of Medicaid regulations that shift Medicaid costs from the federal government to states, which will only worsen state budget problems; and

WHEREAS:
In 2003, Congress enacted a $20 billion fiscal relief package for states, including a $10 billion temporary increase in the federal share for Medicaid costs and $10 billion in state aid grants; and

WHEREAS:
The 2003 state fiscal relief package helped states to mitigate cuts in Medicaid and preserve eligibility; and 

WHEREAS:
Temporary state fiscal relief generates an increase in economic activity of $1.36 for each dollar of cost.

THEREFORE BE IT RESOLVED:
That AFSCME will continue to vigorously press Congress to address the desperate economic conditions in states by providing urgent state fiscal relief and by blocking the Bush administration Medicaid regulations which shift costs on to states; and

BE IT FURTHER RESOLVED:
That AFSCME will continue to oppose cuts in vital public services that are federally-funded and implemented by state and local governments and will advocate for real dollar increases in such programs.
 
 
SUBMITTED BY:  INTERNATIONAL EXECUTIVE BOARD